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Muskrat Falls: an object lesson for Site C

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Muskrat Falls hydro project

The Muskrat Falls hydro project

The Muskrat Falls hydroelectric project was in the news today: costs are up (again), and the project is behind schedule (again).  This won’t happen with Site C, they say; this is doubtful.

In many ways the Muskrat Falls project is similar to Site C: a large hydroelectric project over a major river in the North.  Also like Site C, Muskrat Falls has been running roughshod over First Nations claims, using injunctions against protests.  And like Site C, the Labrador project will produce serious environmental impacts.

In other ways Muskrat Falls is a simpler project: the dam, built of concrete, is a bit smaller and sits on top of very stable bedrock.  Despite the simpler engineering, cost overruns have multiplied.  According to Tom Baird, costs increased by half a billion every year between the initial 2010 estimate ($5 billion) and 2014 ($7 billion).  They have been most recently pegged at $9.2 billion.

Should we be surprised?  Cost overruns are the nature of big projects.  A group of Oxford University researchers have analyzed 245 large dam projects worldwide and concluded that large dams incurred cost overruns of 96% on average.  They also found that the average delay in completion was 44%.

It’s not just dams, of course.  In BC many large projects have had huge cost overruns: 169% for the South Fraser Perimeter Road; 182% for the NorthWest Transmission Line; and a whopping 550% for the Port Mann Bridge/Highway One upgrade.

Why large projects should be subject to overruns as a matter of course, I’ll leave for engineers to answer; but certainly, the complexity of large projects plays a large role.  But maybe the completion delays are an even bigger concern.  For a hydroelectric project like Muskrat Falls or Site C, every month of delay is a month when electricity is not produced and revenue not generated (this week, we learned that BC Hydro has to borrow money in order to pay dividends – long completion times and delays certainly don’t help this situation).

Contrast this with wind power, just to take one of many alternatives.  Individual wind parks are small projects, each with straightforward engineering and off-the-shelf components.  They normally suffer little cost overruns and completion delays.  And completion is quick, which means that money is not tied up for long durations.  And they can be built in installments, keeping pace with the need for supplemental electricity.  And they are the perfect complement to the existing Bennett Dam, which can serve as energy storage, when wind isn’t blowing – which happens rather rarely in the Peace.

Currently, small clean power projects already provide about 14 per cent of BC Hydro’s domestic supply of electricity and account for $8.6 billion in capital investment in the province, and have created a total of 15,970 person-years of construction employment  according to a new report commissioned by Clean Energy BC.

During the planning stage, Muskrat Falls was feared to cost too much, take too long, and produce too few jobs, compared to alternatives.  All of which has turned out to be true, and all of which has also been projected for Site C.

So even if it didn’t make a mockery of First Nations rights, didn’t impact the environment, and didn’t drown excellent farm land, Site C would still be a bad deal.

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Written by enviropaul

April 14, 2016 at 5:34 pm

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